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Tesla International's revenues decreased against the comparative period with reduced utilization of crews in eastern Africa. Tesla International's gross margins were negatively impacted by the reduced utilization of crews in east Africa during the year.

Tesla Offshore saw significant growth in both geophysical and construction revenues compared to 2011 when the impact of the Macondo oil spill and resulting lease sale cancelations had limited Tesla Offshore's activity levels in the Gulf of Mexico. Tesla Offshore's gross margin benefitted from increased activity levels in the Gulf of Mexico.

The Company's EBITDA in 2012 was well ahead of 2011 due to the growth in absolute gross margin partially offset by an increase in general and administrative costs. The Company's consolidated net income in 2012 was also a significant improvement over 2011 due to the increased EBITDA partially offset by increased depreciation related to the Hawk system and additional tax expense.

The Company's working capital decreased $7.1 million during the year to $3.3 million including a net cash deficit of $5.7 million. Operating cash flows generated during the year were used to repay $15.3 million of long-term debt and $5.7 million on outstanding finance leases as well as funding $14.6 million of capital expenditures (net of $14.1 million of lease financed expenditures) during 2012. Operating lines were utilized towards the end of 2012 to fund operations in Canada and International.

Total long-term borrowings were reduced by $6.9 million during the year to $22.2 million. Long-term debt was reduced by $15.3 million with cash flow generated mainly from Canada's winter season. Finance lease obligations increased by $8.4 million during the year as regular payments on outstanding finance leases totalling $5.7 million were more than offset by additional lease financing for a portion of the acquisition of the Hawk system and certain vehicles during the year. At December 31, 2012, the Company had $34.7 million of unused committed bank credit and lease facilities.

Shareholders' equity increased $5.4 million to $63.4 million during the year due to the net income generated during the year along with the exercise of options and an increase in contributed surplus relating to share-based payment charges. This was partially offset by a decrease in accumulated other comprehensive income with the strengthening of the Canadian dollar against the US dollar functional currency of the Company's US subsidiaries.

Outlook:

North America Land Operations

Tesla Canada saw an early start to the current winter season but has seen reduced activity levels during the first quarter of 2013 compared to the past two winters. Tesla Canada is operating seven crews and approximately 80,000 channels for a substantial portion of the quarter at comparable rates to the previous winter. Limited winter work will extend into April. Activity levels in Canada continue to be driven by the large number of operators in the oil sands and shale plays, however, the industry has seen several significant projects cancelled or deferred in the first quarter of 2013 due to issues surrounding foreign investment along with challenges obtaining government approvals. The Company has been able to ensure high utilization of its 13,000 3C stations along with additional 3C rental stations. Tesla Canada also utilized the Company's Hawk system on the first phase of a significant program during the first quarter of 2013 with completion of the project expected in the fourth quarter of 2013. Low natural gas prices will continue to limit exploration activity during the summer months. The Company expects to operate one crew periodically during May and June with a second crew operational during the third quarter with activity in both western and eastern Canada.